Daniel Shin denies hand in Terra’s collapse

Lawyers for Daniel Shin, co-founder of Terraform Labs, told a South Korean court that he did not contribute to Terra’s collapse in any way after being charged with fraud and embezzlement.

Following a preliminary hearing in July 2023, Shin’s attorneys said fellow founder Do Kwon was responsible for Terra’s crash and the implosion of its two tokens, Luna Classic and algorithmic stablecoin UST. The former Terra executive appeared before a Seoul Southern District Court today.

According to a Munhwa Broadcasting Corporation report translated by Google, Shin’s defense accused Kwon of launching external attacks on his own company and pointed to the Anchor protocol as another chief reason for Terra’s tumble.

The defense said Anchor was unreasonably managed and onboarded users with an unsustainable business model. Anchor was a yield-generating platform built atop Terra’s blockchain that allowed UST depositors to earn 20 percent interest on their stablecoins without worrying about volatility.

Shin reportedly departed from Terra and Kwon in 2020, citing irreconcilable differences. The ex-Terra founder stands accused of breach of duty, embezzlement, fraud and violation of South Korea’s Capital Markets Act. 

Kwon, who was an international fugitive, could face similar charges if extradited to South Korea. The U.S. is also vying for the right to try Terra’s former boss after Montenegrin police detained him at an airport and a judge sentenced him to four months in prison. 

Authorities arrested Kwon with a forged Costa Rican passport while attempting to board a private flight bound for the United Arab Emirates. Kwon faces as many as 40 years in South Korea if tried and convicted after spending time in a Balkan prison.

While Terra appointed a new CEO in Chris Amani, Kwon’s lawyers have moved to dismiss a lawsuit from the U.S. Securities and Exchange Commission.